Trade measures of the type imposed by the United States on Chinese tyres run the risk of spilling over and slowing down economic recovery, a senior World Trade Organisation (WTO) official said on Thursday. The tyre trade dispute blew up between the United States and China after Washington imposed additional duties on Chinese-made tyres last Friday, accusing Beijing of flooding the US market.
Valentine Rugwabiza, a WTO deputy director-general, said "safeguard" measures of the type applied by Washington were not protectionist but were still damaging to free trade. "People reverting increasingly to those remedies is a source of concern to us ... They all result in restricting trade and there is a serious risk of spillover and tit-for-tat reaction which will undoubtedly slow down any recovery," she said in an interview with Reuters Television.
Beijing has said the US move sent the wrong message. It wants consultations with the United States over the duties, a step toward seeking a WTO ruling. Rugwabiza said emerging economies had been hard hit by the contraction in world trade brought on by the financial crisis and that stalling trade could lead to political instability.
"If the engine of trade is not put to work again, what countries have to understand is the consequences that that will have in terms of development, but (also) in terms of even political stability," she said, speaking on the sidelines of The Economist's emerging markets summit.
Rugwabiza said she hoped G20 leaders meeting in Pittsburgh next week would commit to wrapping up negotiations on the long-running Doha round of world trade talks by next year and agree to resist protectionist pressures.
European Union Trade Commissioner Catherine Ashton told the meeting she had no doubt US President Barack Obama and US Trade Representative Ron Kirk were committed to trade. "I also have no doubt that there is little, if any, domestic support in the United States for the completion of the Doha round. All of my conversations with Congress, with manufacturing, with the Farm Bureau and with the trade unions say to me that they have a serious domestic issue," she said.